"Taxes, benefits, recordkeeping... couldn't I avoid all that by just hiring a contractor instead of an employee?"

Perhaps, but independent contractors and employees are not simply interchangeable.

Although recent legislation has consolidated the definition of an independent contractor used by several state agencies, applying that law to a particular situation can still be confusing, and the misclassification of a worker can result in some expensive consequences.

What's at Stake?

Employers that have misclassified their workers as independent contractors may be surprised to find that Oregon law often requires state agencies to assess back taxes, penalties, and interest in cases of misclassification. Employees who were not properly paid minimum wage and overtime may also seek back wages, civil penalty wages and interest though the Bureau of Labor and Industries or the courts.

If you are an employee classified as an independent contractor, you should know that misclassified employees run the risk of losing out on lawful benefits and protections like unemployment insurance, income tax withholding, workers compensation coverage for on-the-job injuries, minimum wage and overtime protections as well as other workplace protections under civil rights and wage and hour law. Misclassified employees will almost certainly forfeit benefits offered to properly classified employees such as sick leave, vacation pay and retirement benefits.

Making the Right Decision

This website has been designed to provide you with the resources you need to identify:

The above information is provided as a summary and teaching guide. Nothing on this website is intended as legal advice. If you need legal advice, please consult an attorney. We attempt to update the information on this website as soon as practicable following changes or developments in the laws and rules affecting Oregon employers, but we make no warranties or representations, express or implied, about whether the information provided is current. We urge you to check the applicable statutes and administrative rules yourself and to consult with legal counsel prior to taking action that may invoke employee rights or employer responsibilities or omitting to act when required by law to act.